Canada Real Estate: Own Your Own Property In Canada
You should understand the tax laws applied to Canadian real estate in advance before purchasing and owning a real estate property in Canada.
Residency or citizenship is not a major prerequisite for purchasing and owning property in Canada. Non-residents can purchase and own real estate property in Canada. Nonetheless they will have to file an annual tax returns with the Canada Revenue Agency (CRA).
You can be a provisional resident but if you want to prolong your stay or reside permanently, you have to comply with the immigration laws and satisfy the requirements needed.
Some tax laws involved in Canadian real estate are;
#1. Taxes on Property
As soon as you purchase a property in Canada, you pay a transfer tax based on the province. This tax differs from province to province. There are exemptions if it is your first time purchasing real estate property in Canada.
Yearly property taxes which comprises school and other taxes, are also imposed on purchasers. This is grounded on the property value and how it mirrors on the market value. You can get information on the current property taxes on the specific property you want to purchase.
#2. Taxes on Rental Property
According to The Canadian Income Tax Act, 25% of the gross property rental income is obligatory to be paid every year. Conversely, non-residents in Canada can agree to pay 25% of the net rental income by completing an NR6 form. If the rental property suffers net losses, then you may recover previously paid taxes. Your income will be handled contrarily, then again this will be contingent on whether you’re a partner or a co-owner of the property and whether the income is a business or rental income.
If you wish to make more rental income, you can withhold two types of incurred expenses. These are, the current operating expenses and the capital expenses which gives a longer-term profit.
After procuring a rental property in Canada, the cost or amount spent on furniture and other property equipment cannot be deducted from your rental income for that year.
However, the cost can be subtracted overtime, this is merely because such furniture items denigrate and reduce in quality or value. This deduction from your rental income is known as the capital cost allowance (CCA).
Conclusion
Canadian laws are relatively supple and impartial in owning a real estate property. You don’t have to be a Canadian resident or citizen before owning a property and the property taxes and incurred interests are deductible.
To gain profit in Canadian real estate, you should comprehend that there are many tax deductions at every stage of the real estate investment starting from purchasing the property, owning the property, occupying or renting it and then, finally selling it.
The real estate laws of Canada are enclosed in the Canadian Income Tax Act and the Canada Revenue Agency (CRA).
J C Loum
